Pension gap
Important information - the value of investments can go down as well as up, so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not normally be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity's advisers or an authorised financial adviser of your choice.
Know what you're up against
Not surprisingly, lower wages throughout a woman’s lifetime are having a big affect on women’s pensions. And as private pensions depend on your earnings, it follows that you’ll be saving less. This isn’t helped by the state pension provision.
The most recent data (2018 to 2020) shows that the UK’s gender pension gap – the percentage difference in pension income for female pensioners compared to male pensioners – was 35%1
The changes to childcare provision outlined in the 2023 Spring Budget2 may well help to keep more women working.
From April 2024, working parents of two-year-olds will be able to access 15 hours of government funded childcare per week.
From September 2024, 15 hours of government funded childcare per week will be extended to children from the age of nine months
From September 2025, working parents of children aged 9 months up to 3 years old will be entitled to 30 hours of government funded childcare per week.
This staggered approach intends to give childcare providers time to prepare for the changes, ensuring there are enough providers ready to meet demand.
But even in later life, women are more likely to work part-time or retire early to look after elderly relatives - or because they’re suffering from restrictive menopausal symptoms.
Divorce can also help women lose out later in life - with women neglecting to think about pensions when it comes to their settlement arrangements.
Sources:
1.
Department for Work & Pensions - 5 June 2023
2.
HM Treasury, Spring Budget 2023 factsheet
Take control
The current state of affairs paints a pretty bleak picture. But forewarned is forearmed. Here are some things you can do now to help close the gap.
- Pay your pension some attention now. Open a Self-Invested Personal Pension - if you don’t already have one - with as little as £20 per month (the government tops this up by £5).
- Add 1% if you can to any contributions you’re making to a pension right now. It’ll make a big difference in the long run.
- Take advantage of any additional company contributions on offer to your employee pension.
- If you've collected a few pensions over the years, you might like to understand more about the pros and cons of bringing your pensions together.
- And if you’re thinking of divorcing your partner, remember to factor in both your pensions when discussing your settlement package.
Important information - It’s important to understand that pension transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered. To find out what else you should consider before transferring, please read our transfer factsheet. If you are in any doubt whether or not a pension transfer is suitable for your circumstances we strongly recommend that you seek advice from one of Fidelity’s advisers or an authorised financial adviser of your choice.
What you could do next
Start looking after future you, today
Take control of your retirement savings and get your money working harder with the Fidelity SIPP.
Make the most of your pension allowances
Find out how to make the most of the tax-efficient pension allowances with our handy guides.
Set your retirement goals
Get an indication of the annual income you need in retirement to help you work out how much to save.
